The beginning of what may be a long skirmish between Microsoft and Yahoo is now underway. So far, Yahoo has given a big fat negative to the offer of nearly 45 billion dollars to merge the two companies. This didn’t come as much of a surprise, as there were clear indications in recent days that Yahoo wasn’t about to accept Microsoft’s bear hug without a fight, or at least a demand for more money.
However, it’s not as if Yahoo is going to find another suitor easily. With a long decline in its stock price — except after the Microsoft offer went public — it’s one huge question mark how many large companies are willing to pay tens of billions of dollars for such a troubled company.
Certainly News Corporation isn’t interested, and what other media or technology company is interested or even capable of taking on such a massive deal? Even Microsoft doesn’t have the cash. They have to go into the lending market to get the extra billions they need.
In other words, whatever happens in the end, it may take years to pay off that debt. I know if I held stock in Microsoft, I’d want to hire a psychiatrist and have him or her examine the mental health of Steve Ballmer and all the other executives who signed off on this wrong-headed offer. It doesn’t make a whole lot of sense, and that action would be short of a shareholders lawsuit where Microsoft would have to explain their incredibly desperate scheme in court.
So where does that leave Yahoo Well, certainly most Yahoo stockholders are in it for the money, and if they can make a bundle on a merger, that would assuage their short-term concerns, even if the combine company ran into difficulty on the long haul. They could always bail if the stock price began to tank, and put their money in a more secure stock. Apple?
Now we know that Google has already offered to help Yahoo somehow. The financial writers suggest that Yahoo would pass off their searches to Google and keep the rest of their businesses in house. That’s easier said than done, however, because the antitrust regulators in the U.S. and Europe are sure to be upset if the number one and number two search providers in the world decided to hook up in such a fashion.
This isn’t to say a Microsoft and Yahoo deal wouldn’t get extensive scrutiny as well. It may take months or years for this mess to be sorted out. Even if the merger could be successfully consummated, Google will have had a lead time of another two or three years to build its brand, while its combined competitor was otherwise occupied shoring up the network, getting employees to work together and all the rest. That assumes there are no obstacles, and there will no doubt be plenty.
Another possibility is for Yahoo to buy the remnants of AOL. No, not the dial-up online service, which has little value. That ought to be passed on to Net Zero for chump change, so they could add it to their $9.95 per month portfolio. But the AOL portal has real value, and having it in Yahoo’s control might actually yield a positive benefit. Plus, Time Warner would probably let it go for the low billions and be happy that the final and fitful remnants of that horrible merger have been disposed of.
But what about Apple?
Well, as far as Apple is concerned, any tech pundit or financial analyst who suggests they might benefit somehow by acquiring Yahoo is smoking something something nasty.
As far as I’m concerned, Apple ought to sit back and let it all play out. Apple already has deals in place with Google and Yahoo They work with Microsoft in some ways, particularly development of Office for the Mac.
Sure, a combined Microsoft and Yahoo might attempt to ditch the remnants of Mac support, but Apple still has Google. Besides, if the Micro-Yahoo company wanted to abandon millions of potential visitors to its portal, and users of its products, so be it. It’s their loss.
In the end, it may well be that Microsoft and Yahoo will some day be one. But it won’t be a match made in heaven.
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